An insurance company can deny short-term disability at two points: when a person is attempting to buy the coverage and when an individual files a claim for benefits.
Many people begin thinking about protecting their income after it becomes too late. The doctor might call with bad news, or a positive pregnancy test triggers thoughts about maternity leave.
In these cases, getting coverage at work rather than outside your employer boosts your approval odds.
When applying for benefits, the insurance company can reject your claim for reasons spelled out in your contract. Learn the provisions that trip people up and avoid filing an appeal.
Reasons for Coverage Denials
Two reasons explain why the insurance company might deny short-term disability coverage.
- The criteria vary based on where and how you buy the policy
- Non-workplace coverage has the strictest criteria
- Personal plans purchased at the worksite have more lenient rules
- Group programs paid by employers often accept all applicants
- State-mandated plans always approve new coverage requests
- Each company has unique underwriting rules and asks different questions
Being Pregnant
You can be denied short-term disability coverage for being pregnant if you try buying outside of your employer. Individual policies obtained privately could ask this question on the application and turn you down if you answer yes.
You can get a new policy approved while pregnant by applying for personal or group coverage at work. The applications for worksite-based policies do not ask if you are expecting a baby.
You will have immediate income protections for accidents and illnesses. However, the new policy will not pay benefits for any maternity-related losses until twelve months after the effective date (see pre-existing conditions below).
Excess Weight
You could be denied short-term disability coverage for being overweight. The reason is simple. Obese people file more claims, generating excessive losses for insurance companies.
The new policy application might ask about your height and weight so the underwriter can calculate your Body Mass Index (BMI). If so, expect an instant rejection if your BMI exceeds 38 per these examples.
| Height (Feet & Inches) | Weight (Pounds) |
|---|---|
| 5’ 0” | 195 |
| 5’ 6” | 237 |
| 6’ 0” | 278 |
Physical Health
The inability to establish good health is the number one reason short-term disability insurance companies deny coverage to applicants. Employer-paid group plans with guaranteed-issue and state-mandated programs are the only exception.
Unfortunately, too many people wait until after a medical event to realize the importance of protecting their paycheck. Expect a quick rejection if you answer yes to any of these common application questions.
- Have you missed five or more consecutive work days in the past 12 months for any injury or illness other than cold, flu, or maternity?
- Have you ever been treated for or diagnosed by a member of the medical profession as having Acquired Immune Deficiency Syndrome (AIDS) or tested positive for Human Immunodeficiency Virus (HIV)?
- Have you received medical advice in the past 12 months, sought treatment, taken medication, or been hospitalized for cancer (except basal cell skin cancer), insulin-dependent diabetes, or cirrhosis?
Reasons for Claim Denials
There are many reasons why an insurance company might deny your claim for short-term disability benefits – provided you have the coverage in force. Learn the rules before filing an appeal for the four types of programs.
- Individual policies, not through employers with limited benefits
- Group programs paid by employers cover more
- State-mandated plans with the fewest restrictions
Pre-Existing Condition
Having a pre-existing health condition is the number-one reason short-term disability might deny your claim for benefits, even when you have a legitimate medical problem.
Pre-existing health condition clauses often include a 12/12 definition. Read your disclosure statement carefully, where you might find similar legal language.
- If you become disabled because of a pre-existing condition, we will not pay for any loss if it begins during the first 12 months the policy is in force.
- A pre-existing condition means having a sickness or physical disorder for which you were treated, received medical advice, or had taken medication within 12 months before the effective date.
Mental Health
Short-term disability benefits can be denied for mental health problems such as anxiety, depression, or stress. You see the rejection of claims for mental health most frequently with individual and personal policies but less often with group and state plans.
Most plans do not cover mental health problems, and you might find that your policy explicitly excludes benefits, using legal language similar to this.
“We will not pay benefits for losses caused by or are the result of your having a mental or emotional disease or disorder of any kind, including psychosis and mood disorders.”
Elimination Period
Failure to satisfy your policy’s elimination period is another reason short-term disability companies deny claims. The elimination period defines how quickly benefits begin after you cannot perform your job duties.
You can collect disability briefly after surgery, provided your recovery extends beyond the elimination period. However, the opposite is also true. The adjuster might reject your claim if you can return to work too quickly.
Qualifying Conditions
Not having a qualifying medical condition is another reason the insurance company might deny your short-term disability claim. Your policy does not cover everything automatically.
The illnesses and injuries eligible for short-term disability benefits must meet five critical criteria; otherwise, the adjuster will reject your claim.
- Occurs after the effective date
- It happens while coverage is in force
- It is not explicitly excluded
- Causes a loss of income
- Under the care of a doctor
Policy Exclusions
Having a condition excluded expressly by your policy is another reason short-term disability might deny your claim for benefits – even when you have an otherwise legitimate medical problem.
You might find many of these prohibitions included in your disclosure statement.
- Participating in a felony, riot, or insurrection
- Trying to commit suicide or injure yourself
- Being exposed to an act of war
- Serving in the armed forces
- Operating any private aircraft (no published schedule)
- Working at an illegal job
- Riding or driving in a motor vehicle race or stunt
- Participating in a sport for compensation
Paperwork Mistakes
Incomplete documentation and simple paperwork mistakes are other reasons why short-term disability can deny benefits. Fortunately, you have a second chance in these instances.
Read the instructions carefully and speak to a claims adjuster to identify the rationale for the rejection. Careless mistakes often have profound consequences.
For instance, a simple missing signature or date from any three main sections could cause underwriting to rebuff your claim.
- Policy owner: certifying the answers are correct
- Employer: verifying the loss of income
- Physician: specifying the diagnosis that prevents the patient from working
Getting Fired
People sometimes worry about getting fired if their short-term disability benefits are denied. The claims decision made by a third party should not influence your employment status.
Your employer can fire you after an approved claim because the insurance does not protect your job. The Family Medical Leave Act (FMLA) serves that role when applicable.
Therefore, rejecting your claim for benefits should not lead to job termination.
